1989 (9) TMI 143 - AT - Income Tax

Summary

Issues:
- Interpretation of deduction under sections 80J and 80HH of the Income Tax Act, 1961
- Jurisdiction of the Commissioner to invoke section 263 of the Act
- Treatment of industrial undertakings as separate units for relief under the mentioned sections

Analysis:

Interpretation of Deduction under Sections 80J and 80HH:
The case involved an appeal regarding the computation of deduction under sections 80J and 80HH of the Income Tax Act for the assessment years 1983-84 and 1984-85. The Commissioner set aside the assessment orders due to an alleged error in allowing deductions under section 80J without considering the deduction admissible under section 80HH. The appellant argued that relief under both sections should be applied separately to each industrial undertaking, emphasizing the need to first allow relief under section 80HH before section 80J. The appellant's stance was supported by legal interpretations and circulars, highlighting the necessity to treat each unit as a separate industrial undertaking for the purpose of relief under these sections.

Jurisdiction of the Commissioner:
The appellant contended that the Commissioner had no jurisdiction to invoke section 263 of the Act for the assessment year 1983-84, as the assessment order had merged with the order of the first appellate authority. Citing a Bombay High Court decision, the appellant argued that the Commissioner's intervention was not warranted in this case. However, this argument was not pressed seriously and was rejected.

Treatment of Industrial Undertakings as Separate Units:
The Tribunal analyzed the provisions of sections 80J and 80HH along with relevant court decisions and circulars to determine that each industrial undertaking should be considered as a separate unit for the purpose of relief under these sections. Referring to past judgments, including one by the Madras High Court, the Tribunal emphasized the need to compute deductions and reliefs separately for each industrial undertaking. Consequently, the Tribunal concluded that the assessments were not erroneous or prejudicial to the revenue's interest, leading to the cancellation of the impugned order and restoration of the original assessments.

In conclusion, the Tribunal allowed the appeals, highlighting the importance of treating each industrial undertaking as a distinct unit for the application of deductions under sections 80J and 80HH. The judgment clarified the correct interpretation of the provisions and emphasized the separate treatment of industrial units for tax relief purposes.